OMAHA, Nebraska — Last fall, Warren Buffett's Berkshire Hathaway ponied up $230 million, through its MidAmerican Energy Holdings subsidiary, to acquire a 10 percent stake in BYD Company, the parent of BYD Auto, the Chinese battery and electric-vehicle specialist. That turns out to have been yet another in a career of prescient moves by the great investment mind of Buffett.
When the transaction was finally approved last week by Chinese government regulators, BYD's Hong Kong-listed shares had quintupled in price, and the paper value of MidAmerican's stake in BYD had risen to $1.25 billion, according to Reuters and Bloomberg, giving Buffett a paper profit of more than $1 billion.
BYD last week said it plans to raise an additional $400 million for expansion through a new stock offering on the Shenzhen exchange.
BYD expects to sell 400,000 vehicles this year, including the F3DM plug-in hybrid sedan that went on sale in China in December.
Buffett's partner, Berkshire Vice Chairman Charlie Munger, first identified BYD as a potential investment target. In an interview earlier this year with Bloomberg, Munger said, "BYD is one of the most interesting small companies in the world."
Inside Line says: Perhaps the Chinese will bestow a new title on Mr. Buffett: the "Sage of Shenzhen." — Paul Lienert, Correspondent
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